Circassia Pharmaceuticals : Preliminary Results for the Year Ended 31 December 2016

Click here to download the full 2016 preliminary results statement

- Transformational transaction with AstraZeneca for US commercial rights to two COPD products -
- Leverages commercial infrastructure established as key growth platform -
- Robust NIOX® sales growth -
- Broad respiratory pipeline progressing -
- Allergy investment halted following additional disappointing study results -

Oxford, UK - 25 April 2016: Circassia Pharmaceuticals plc ('Circassia' or 'the Company') (LSE: CIR), a specialty pharmaceutical company focused on respiratory disease, today announces its preliminary results for the year ended 31 December 2016 and a post-period update.

Transformational transaction with AstraZeneca (AZ) announced post-period

• Collaboration to commercialise COPD product Tudorza® in US (AZ 2016 revenues $80 million)
• Secures US commercial rights to phase III product Duaklir® with filing planned H1 2018
• Collaboration to fund immediate doubling of Circassia's US sales force plus R&D contributions
• $50 million of shares issued to AZ
• Third-party debt to fund further consideration of up to $180 million

Commercial platform expanded as strategic asset

• US sales force expanded to approximately 100 in 2016; further expansion to 200 under AZ collaboration
• US key accounts and managed markets teams established
• UK direct sales force launched
• German and Chinese commercial teams strengthened
• Appointing new specialist distributors in France and Italy

NIOX® performing strongly

• Sales increased 23% (10% at CER) to £23.1 million (2015 CER: £21.0 million of which £9.5 million under previous ownership)
• Direct clinical sales (ie non-research) increased 35% (21% CER) compared with 2015
• Rapid US clinical revenue growth following sales force expansion; 57% increase in Q1 2017 vs Q1 2016
• Reimbursement established with a number of additional health systems in US
• US label extension to include four, five and six year olds filed
• Successful primary ciliary dyskinesia diagnosis study; EU certification update initiated

Respiratory portfolio progressing

• Fliveo® (Flixotide® pMDI substitute) EU rights discussions initiated H2 2016
• Seriveo® (Seretide® pMDI substitute) filing targeted H1 2019
• Spiriva® DPI substitute pharmacokinetic study planned H1 2018
• Two COPD formulations in development; LABA / LAMA on track to enter clinic 2018

Allergy investment curtailed

• House dust mite allergy phase IIb study did not meet primary endpoint
• Investment in allergy portfolio halted

Cost containment ongoing

• Facilities consolidated in US, Sweden and UK; Chicago and Solna closed with Oxford reduced
• Positions reduced in R&D and G&A

Financial highlights

• Revenues increased to £23.1 million (2015: £10.8 million)
• R&D investment £46.2 million (2015: £46.8 million) including allergy expenditure of £21.5 million
• Underlying loss for year £57.4 million (2015: £50.0 million); total loss £137.4 million (2015: £50.0 million)
• Allergy portfolio provisions, restructuring costs and impairments £80.0 million (2015: £nil)
• Strong balance sheet with £117.4 million cash at 31 December 2016 (31 December 2015: £203.8 million with £33.2 million relating to 2015 acquisitions paid during 2016)

Steve Harris, Circassia's Chief Executive, said: 'Following the receipt of disappointing phase III allergy results in June last year, we worked hard to strengthen our commercial platform and respiratory portfolio. We have substantially increased sales of our market-leading NIOX® asthma management products and recently completed a transformational transaction with AstraZeneca to commercialise the COPD products Tudorza® and Duaklir® in the United States. We also broadened our respiratory pipeline, adding three earlier-stage COPD products. In addition, we maintained a resolute focus on costs, while continuing to invest in our commercial infrastructure as a strategic growth platform. Following disappointing results from our house dust mite allergy field study, we have taken the difficult decision to curtail investment in our allergy programmes.'

'With these significant developments now behind us, we look forward to the coming year with optimism. We have built a strategic asset in our direct specialty sales infrastructure, which we plan to strengthen further as we accelerate our commercial collaboration with AstraZeneca. We also intend to advance our other respiratory products, as well as pursuing additional in-licensing and acquisition opportunities to expand our commercial portfolio. As a result, we are increasingly well positioned to achieve our ambition of becoming a world-class, self-sustaining specialty pharmaceutical business.'

Analyst meeting and webcast
An analyst meeting will take place today at 9.30am at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. A webcast of the event will be available in the Media section of the Company's website at www.circassia.com.

Enquiries

Circassia
Steve Harris, Chief Executive Officer Tel: +44 (0) 1865 405 560
Julien Cotta, Chief Financial Officer
Rob Budge, Corporate Communications

JP Morgan CazenoveJames Mitford / Chris Cargill Tel: +44 (0) 20 7742 4000

Numis SecuritiesClare Terlouw / Freddie Barnfield Tel: +44 (0) 20 7260 1000

FTI ConsultingBen Atwell / Simon Conway / Mo Noonan Tel: +44 (0) 20 3727 1000

About Circassia
Circassia is a world-class specialty respiratory pharmaceutical business with a strong commercial infrastructure, marketed products and portfolio of treatments targeting major market opportunities. The Company sells its novel, market-leading NIOX® asthma management products directly to specialists in the United States, United Kingdom and Germany, and in a wide range of other countries through its network of partners. Circassia recently established a collaboration with AstraZeneca in the United States in which it promotes the chronic obstructive pulmonary disease (COPD) treatment Tudorza®, and has the US commercial rights to late-stage COPD product Duaklir®.

Circassia's broad-based development pipeline includes a range of respiratory medicines. The Company's lead asthma treatment, Fliveo®, targets substitution of GSK's Flixotide® pMDI and is approved in the UK. Circassia is also developing a direct substitute for Seretide® pMDI, Seriveo®. In addition, the Company's pipeline includes a number of inhaled medicines for COPD, including single and combination dose products. For more information on Circassia please visit www.circassia.com.

Duaklir® is a registered trademark in certain European countries; the US trademark is to be confirmed
Constant exchange rates (CER) for 2015 represent reported 2015 numbers re‐stated using 2016 average exchange rates; management believes constant currency numbers better represent the underlying performance of the Group due to subsidiary functional currency fluctuations against Sterling
Direct clinical sales to clinicians, hospitals and distributors; research sales to pharmaceutical companies for use in clinical studies
Impairment of goodwill (£74.5 million), intangible assets impairment (£0.3 million), restructuring costs (£2.8 million) and cost for termination of certain contracts (£2.4 million)
Cash, cash equivalents and short-term deposits

Forward-looking statements
This press release contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Circassia. The use of terms such as 'may', 'will', 'should', 'expect', 'anticipate', 'project', 'estimate', 'intend', 'continue', 'target' or 'believe' and similar expressions (or the negatives thereof) are generally intended to identify forward-looking statements. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this press release should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. Circassia undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances.